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LEHER FROM THE EDITOR The questions posed by the Shah's depar-l ture from Iran are as serious as the problems caused by his presence. Perhaps there is a lesson for everyone in this situation; one wonders i f the Shah has belatedly learned his.

The Iranians have proved their point. The millions that walked in the streets of Tehrar. confirmed that the revolt was not instigated by a small group of leftists, Marxists or Leninists, but that it was prompted by a desire to rid the country of Savak, the bureaucratic inefficiency, wide-spread cor­ruption and above all the extravagances of the "king of kings".

Although they have begun to realise their ambitions, for the people of Iran, the real challenge lies ahead. How will they use their new-found freedom and power? Wil l they improve the lot of the masses or will they be side-tracked by internal squabbles? Many people, specially in the West, expect to see the Islamic purists clash with the Marxists and Communists, now that the Shah is out of the picture. Nor is this unlikely, if the ex­perience of other countries is anything to go by. I t would be equally significant if there is a military coup d'etat. That would bring the crisis back to square one.

Another lesson to be learned from Iran is that of over-dependence on a superpower. B y trying to remove the grip of U S influence the Iranians might suddenly find themselves in the embrace of the "Russian bear". But if someone like the Ayatollah Khomeini does take over this is unlikely to happen, Islam and communism being poles apart. This is one reason why some of the Gulf countries should not have too many apprehensions about what is happening in Iran.

The real challenge in Iran is how to combine the principles of Islam as defined by the purists without standing in the way of progress.

But whoever assumes power must remember that Iran cannot develop and pro­gress in isolation from the rest of the world -East and West. Economic interests dictate flexibility which does not mean abandoning national rights. Countries like Algeria and Iraq have proved they can make economic and political ends meet.

There is little doubt, in the end, that the United States will again be the biggest loser in Iran. And the Americans have no one else to blame but themselves. The U S has shown once more that is cannot learn from past mistakes. Once again it has bet on the wrong horse, even by expressing explicit support for Dr. Bakhtiar. Consequently it must continue to pay a high price for its mistakes.

Raphael Calis

6 THE MIDDLE EAST FEBRUARY 1979

CONTENTS FEBRUARY 1979 No.52

5 Letters to the Editor

NEWS IN PERSPECTIVE

8 Iran: what it means to the West

12 Turkey: renewed Western attention

13 US: Arab-Americans push ME problem

16 Mauritania: change of heart

20 UN: General Assembly assessed

COVER STORY

25 Just who Is buying America?

FEATURES

37 The Armenians - what next

40 Egypt-israei - two sides of a coin

42 Eritrea - pictures tell a sorry tale

44 Alger ia -Boumedlenne 's policies to live on

FORUM

47 Heikal speaks out

T H E A R M E N I A N S : T h e recent w a v e of ant i -A r m e n i a n feel ing in cer ta in par ts of L e b a n o n h a s a d d e d a b lack page to th is peop le ' s a l ready t rag ic history. John Munro in Be i ru t c a r r i e d out an in-depth invest igat ion and repor ts on the cu r ren t A r m e n i a n s i tuat ion.

Page 37

F O C U S ON IRAQ: T e n y e a r s ago the B a a t h Par ty c a m e to p o w e r - a n d s t a y e d , in an e x t e n s i v e s u r v e y of the count ry , The Middle East e x a m i n e s the resu l ts of the often u n p r e c e d e n t e d po l ic ies in t roduced by the p resen t reg ime. Page 101

MOSAIC 57 Art/Boullata 59 Behaviour /exorcism 60 Women /Libya's 62 Environment/Oman's 63 Medicine/early Arab 73 Culture/Belteddlne 75 Books 76 Reverie

BUSINESS 78 Oman: new economic

order 80 Algeria: mining sector

developed 86 Airlines: prospects for

pan-Arab 88 Jordan: ways to counter

inflation 90 O P E C : lending

bottlenecks 92 UAE: is industry the

answer? 94 Kuwait: joint drug

project 94 Egypt: either-or '79

budget 96 Israel: fears of peace 97 Money: learn from

Japan 98 Business interview:

Morocco's Energy Minister Saadi

100 In the pipeline

SPECIAL SURVEY 101 Focus on Iraq: 105 History 106 Oil 107 Trade 108 Industry 110 Labour 112 Transport 117 Agriculture

C O V E R S T O R Y : T h e Uni ted S t a t e s is in an uproar over repor ted l a r g e - s c a l e buy ing by the A r a b s of ail th ings A m e r i c a n . The Middle East t a k e s a rat ionai iook at th is new " m e d i a even t " a n d f i nds moun ta ins m a d e out of mo le hi l ls. Page 25

F O R U M : M u h a m m a d H a s s a n e i n He ika l i s nothing if not ou t spoken . In a w ide - rang ing in terv iew with Fulvio Grimaldl, the late P r e s i d e n t N a s s e r ' s c l o s e s t conf idant c o v e r s Sov ie t and A m e r i c a n po l i c ies t o w a r d s Egyp t a n d the rift in the A r a b wor ld c a u s e d by C a m p D a v i d .

Page 47

118 Town planning 120 Literacy 121 Arabisation 122 Theatre 124 Women 128 Art 128 Music 130 Archaeology

Picture credits: AP: 8, 9, 12, 20, 38, 39, 40, 41, 45; Gamma: 16, 45, 46; Camera Press: 26, 28, 30, 32, 78, 79, 80; Rex Features: 44; Fulvio Grimaldi: 47, 48, 49, 50, 112, 121; Vittoria Aiiiata: 60, 61; Richard Turpin: 62, 63; Manseii: 63, 64, 73; Popperfoto: 76; Christine Osborne: 88; John Bonar: 92. '

THE MIDDLE EAST FEBRUARY 1979 7

COVER STORY MUCH SOUND AND FURY

ARE THE ARABS BUYING HMERICA? Americans have a rather xenophobic reaction now that international capital has reversed its course and is flowing into the United States. Determining the realities of foreign investment in the US

is a "kind of detective game played with extremely elusive and fuzzy statistical tools", a recent study concludes. But one thing does emerge from a study

of the facts by Mark Bruzonsky in Washington - there is very little fire behind the smoke screen of confusion which has it that the Arabs are

buying the States lock, stock and barrel.

A "foreign money invasion" infxj the U S has some Americans near panic, fearful that America is fast losing control over itself.

Newspaper stories began raising eyebrows a few years ago with erroneous warnings that with just three years surplus revenues the O P E C countries could buy up all the stocks listed on the New York Stock Exchange.

Magazine headlines - such as "Foreign Investors Go on a Spree in the U S " in US News And World Report and "Who's Buying America" in New York Magazine -have become part of America's daily diet.

More than 80 bills have been introduced in the Congress during the past five years in order to investigate or restrict foreign money infiows into the U S . So far, the main result has been disclosure legislation for in­vestments of specific kinds past specific thresholds.

"The Arabs" of course are recipients of most of the criticism, even though they are responsible for very little of the business

takeovers or accumulations of real estate. These are the two types of foreign invest­

ment which are the most controversial. I f it were true that any substantial segment of American real estate or American industry were being bought up, there might be cause for "sunshine" (disclosure) legislation or even protective measures. Yet it is precisely in these areas that foreign control is minimal and Arab control minute.

Sti l l , for many Americans, the spectre of "Foreign Inves tment" is an a l l -encompassing one with little distinction being made between portfolio investments and direct investments, which do involve ownership and hence however indirectly, politics.

American concern has three basic causes: First, there is, undeniably, a substantial

rise in foreign funds into America spurred by a decade of dollar devaluations, O P E C ' s successful assertion of oil-pricing power, and the relative soundness of the gigantic U S

economy. It is a new phenomenon for Americans who have an "extremely ethnocentric view" of this kind of thing which is "part of American immaturity", one foreign affairs specialist notes.

Second, Arabs (and also Japanese) have always been rather mysterious and sinister figures to Americans. As one study has con­cluded. "Foreign investments are perceived as a threat in direct proportion to how foreign the foreigners are." And for this reason the Arabs get most of the press attention while the Europeans do most of the non-portfolio investing.

Third, Jewish concern over how Arab money infiuence can trickle down into political power and public opinion manipulation has substantially increased public interest in all foreign-money infiows. Such organisations as the B'nai B'r i th, the American Zionist Organisation, the American Israel Public Affairs Committee and the American Jewish Congress are con-

THE MIDDLE EAST FEBRUARY 1979 25

COVER STORY stantly attempting to portray Arab money as Arab power and Arab power as "bad for America" (not to mention Israel).

Of course, it is the press which nourishes the incipient uneasiness accompanying this historic reversal of the post-World War 11 flow of international capital. "The press has indeed found foreign investment in the U S to be a hot topic," journalist Carlton Smith recently noted in Politics Today. " I t may even be, in large part, a media event."

To a certain extent, the tide of articles focusing on what is in fact largely an overblown invasion of foreign funds is a jour­nalistic natural. After all, with the ever-present "energy crisis", the periodic muscle-flexing by O P E C , the dollar's continual weakness and the constant Arab-Jewish propaganda squabbling, discussions of foreign investments here are but normal spin-offs from these other everyday topics.

Normally, though, the fires of public anxiety are more often doused with press-provided analyses and statistics than fanned by them. But despite numerous newspaper and magazine reports which tend to highlight the limited amounts and effects of foreign investment, public anxiety still seems to be, growing. And despite press reports that .Arab investment remains heavily portfolio - with Arab direct invest­ment and real estate purchases very small proportions of those totals - the myth remains the Arabs are buying up America.

Examples of worry and concern over the "Foreign Money Invasion" abound:

... New(.week's cover on 27 November last year portrayed the Statue of Liberty beleaguered by a Japanese, a European and an Arab - all with hands raised and filled with dollars. A sign hung from the statue's head read "For sale". The cover's title: "The Buying of America".

. . . The American Jewish Committee has begun publishing Petro Impact - a newsletter devoted to uncovering the misuses and abuses of "Arab involvement in American affairs".

. . . A new best-seller - America For Sale: An Alarming Look At How Foreign Money Is Buying Our Country - is now on the bookstands. Respected author Kermeth C Crowe concludes in the book's final paragraph: "The United States must for­mulate an economic equivalent of the Monroe Doctrine - a national policy which clearly prohibits foreign governments or their agencies from making controlling in­vestments in corporate America and which would impose on the Commerce Depart­ment its own suggested role of a continuous monitoring, analysis and disclosure of the impact of all foreign investments, private and government, on the nation's economy."

. . . The cover of the first issue of Real Estate Washington - "a slick, classy bimonthly" says The Washington Post -pictures a smiling Arab with the caption "Is Washington for Sale?" and dollar signs in

Chase Manhattan, New York; Senate concern on "bundles of foreign money"

the lenses of his sunglasses. Author Jay Courley warns that experts see a "tidal wave" of foreign investment in American real estate just ahead.

... Time magazine reported in its 8 January issue that "few subjects scare and anger American farmers more than reports that carpetbagging foreigners are swallowing up U S agricultural land from Georgia to California. I f one wants to listen to many farmers and farm-belt politicians, at least half the population of Europe and maybe a million Arabs and Japanese are storming ashore, money bags in hand, to buy every square inch of topsoil."

. . . Fears of "a collapse of the entire inter­national financial structure" and of the "enormous growth of Arab influence and power over the shaping and exercise of U S policy decisions and private sector behaviour" are highlighted in a new 49-page American Jewish Committee study titled "Arab Investment and Influence in the U S . "

The report raises some valid points, says one Treasury Department official. "But it only looks at Arab foreign investments while i : should consider the general subject c: foreign money coming into the U S . "

I n spite of its economic difficulties, the U S remains the world prime investment centre par excellence. And that's why foreign investors are lined up to sink their funds into what many Americans consider a somewhat i l l economy.

"At bottom the foreign investors are banking on the bedrock of America,' Newsweek noted. "The economy and the dollar might stumble, but America is seen as a pillar of free-market capitalism and private wealth in a world sliding toward socialism." One multinational executive sums things up, "The American economy has a slight hiccup, that is a l l ."

Europeans are diversifying, hedging their wealth against political troubles in their homelands and taking advantage of out-of-balance exchange rates. "The situation in Europe is growing worse and worse when it comes to the economic and social situation," says Marc Theisen, head of international marketing for a Washington realty firm. "They are not so much looking to get rich in the states, because they are rich. They want to stay rich."

The Japanese are compensating for the yen-dollar reversal, improving the US-Japan balance of trade situation, and pro­tecting themselves against possible pro­tectionist import restrictions by manuifac-turing inside the U S .

The Arabs are looking for methods of safely investing their windfall and attempting to replace their inevitably declining oil base with a secure, long-term investment base.

Al l in all, the Euro-, Japo- and petro­dollars flowing back to the U S are sizeable by all previous measurements - and sheer volume is sometimes unsettling. Yet the entire $311 billion in U S securities and direct investments held by foreigners - a 400 per cent increase in one decade - is still below the $381 billion in similar U S in­vestments abroad.

And the forecasts of hundreds of billions of yearly surplus petro-doUars craving

"Direct Investment" By Foreign "Direct investment" by Companies in US US Companies Abroad

Canada 6 34 Netherlands 6 4 United Kingdom 6 16 Germany 2 10 Switzerland 2 6 Other European 4 20 Japan 1 4 Latin Amer ica 3 Other 1 20

Total 31 138

* "Direct investment' defined as ownership Source: Commerce Department of 10 per cent or more of company's stock. through 1976.

26 THE MIDDLE EAST FEBRUARY 1979

COVER STORY

New myth: Europeans, Arabs, Japanese buying every square inch of top soil

attempts to buy large segments of the U S stock market and American farm land have proved illusory. One Treasury Department official recently confided in private that the West had learnt to do a fantastic job in selling the Arabs everything imaginable, recouping through recycling much more of the petrodollar bon£mza than had been ex­pected just a few years ago.

In fact, according to noted oil consultant Walter J . Levy writing in The New York Times on 5 January, O P E C government revenues since 1974 have totalled $500 billion. But of that a gigantic $400 billion has probably been expended on goods, services and military expansion. And the actual value received, based on cost levels in industrialised countries falls in the $200 -300 billion range."

Although Arab purchases of treasury bonds and other financial securities have been substantial since 1974, this kind of portfolio investment is not - or at least should not be - a major source of concern. These financial instruments, largely a matter of govemment-to-govemment debts, involve no production or marketing, no real estate ownership or management decisions.

In fact, the Treasury Department strongly

Official Reserve Assets Other Government assets

Total

Private Assets;

Direct investments Securi t ies Bank and Non-Bank Loans

Total

Source: Commerce Department through 1976.

encourages this kind of investment as a stabilising mechanism for the dollar. And furthermore, though this is rarely mentioned by government officials, by entrusting parts of their national treasuries to American safekeeping, these Arab governments give a de facto pledge to support the dollar's worth and to generally align their policies with the U S at the risk of finding their assets frozen during any major political confrontation.

O P E C holdings do make up the majority of the $107 billion in foreign government claims against the U S . And within the private-assets category O P E C citizens no doubt hold a large amount of the $55 billion in securities and $74 billion in loans attributable to foreigners.

But when it comes to the kinds of invest­ment which are more than financial transactions, which truly represent "buy­ing" of American businesses, land, and pro­perty not only are Arab holdings negligible, but all foreign holdings are minute before America's nearly $3 trillion in business assets and the vastness of its real estate resources.

The Washington Post recently con­cluded: "Actually, less than 1 per cent of all foreign direct investment has come from the

Foreign Assets in US in Biiiions of Dollars

101 6

65 107

137 30 45 55

101 74

283 159

oil-producing nations. The bulk - 67 pe: cent - has poured in from Europe, Canada has accounted for 18 per cent, and Japan : per cent." This being the reality, how can the fear o: Arab investments be explained? Carltor. Smith took a stab at explaining things:

" I t cannot be merely coincidental that perception of foreign investments as a problem or potential threat began - at least in the media - in 1974." That was the year the Arab oil embargo against the U S ended, the energy crisis became contemporan-wisdom, and the Japanese were becoming visible with, for instance, Matsushita purchasing Motorola (creating Quasar) and the Beuk of Tokyo acquiring Southern California First National Bank. Before that. Smith notes, "there was no indication that Americans had been alarmed by, or were even aware of, foreign ownership of such thoroughly domesticated companies as Seagram, Lever Brothers, Shell, Lipton, or Cood Humor. But of course those foreigners were Canadians, British, Dutch - people just like you or me."

As Smith continues, "The Japanese tend to get a discreetly bad press. The Arabs are simply, as an old-fashioned editor would say, good copy."

In short. Smith notes, "the Arabs are news. Being much in the news, they are called to the attention of politicians and other attention-getters, who partly realise they can get attention by invoking the Arab bogeyman . . . They view with alarm and are thereupon quoted by the press. The stories can't be said to be media-invented, but they are certainly media-propelled."

Many writers who have attempted to un­derstand American attitudes toward foreign investment have concluded, like Smith, that there is a subtle combination of racism and xenophobia involved in the way Americans unconsciously select what to worry about. Smith adds in his Politics Today analysis, "Americans have not com­pletely forgotten the yellow peril. As for the Arabs . . . well, Americans aren't quite used to men dressed in flowing white robes. The reflex reaction in some American brains is that there's something spooky over there, a little scary . . .

"So, there's your foreign investor, the one a lot of us are getting worried about, alarmed, or even damn mad. The Canadians are okay, and the British, even the Germans. It's those other people," Smith concludes. Sti l l , he adds, "the Arab who is buying up huge chunks of America -its banks, its commercial properties, its farms and ranches - is a figment of the national imagination. Perhaps something for psychologists to ponder, a symptom of whatever it is that's troubling many Americans. Particularly, it seems, farm folk." What's really troubling most Americans, one foreign affairs specialist con­fides, is that foreign money is a "symbol of

US Assets Abroad in Billions of Dollars

19 46

28 THE MIDDLE EAST FEBRUARY 1979

COVER STORY

Another unfounded fear: Arab grants to American universities

how we're losing our power in the world." Beyond the xenophobic origins of much of

the American befuddlement about foreign money, there is at least one interesting irony. Half of the.state governments actual­ly maintain offices in Europe or Japan vigorously competing to lure foreign money to their states. The State of Michigan un­ashamedly runs advertisements exclaiming "State for Sale". Investment banker Felix Rohatyn puts a humourous gloss on all this by suggesting: "We ought to change the sign on the Statue of Liberty to read, 'This time around, give us your rich'."

In fairness to American sensibilities, however, it is necessary to point out that there have been protests over European in­vestment too. Pennsylvania Congressman Joseph Gaydos headed a vocal campaign in 1975, for instance, to prevent Baron Guy de Rothschild from purchasing Copperweld Corporation - Rothschild is a prominent French Jew. "The upsurge of foreign holdings in this country has been dramatic and frightening," Gaydos harked. "Is it wise for America to put the control of key in­dustries, strategic raw materials and vital natural resources into the hands of someone

whose national loyalties are not with the U S but with a foreign government?" he asked. No discrimination here. Just a lot of political gravy and fear-provoking rhetoric.

In two areas, however, real problems do seem to have arisen with foreign investment, and specifically with Arab investments.

Unlike with direct investments, no national records are kept concerning land purchases. Thousands of county court houses throughout the country maintain these records, but purchases are often through dummy corporations.

It is not so much that petrodollars are being used to purchase any sizeable amount of American farmland - in fact only about 3 per cent of farm acreage changes hands yearly and only about 5 per cent of that is bought by possibly foreign buyers.

Rather it is the inflationary effect of foreign money, especially O P E C money, on land prices which has so many farmers up in arms. "It 's creating a problem for younger farmers to ever be able to buy land," ex­plained the president of a rural Maryland farm bureau to the Washington Post in November.

Even on this issue, however, there is con­

siderable dispute whether foreign invest­ment in farm land is responsible for in­flationary prices. While acknowledging that this belief is the main objection of US farmers to foreign investment. Time magazine concluded: "in fact land prices have been climbing steeply, but almost wholly because of demand by Americans."

Nevertheless, all the attention has resulted in federal legislation requiring registration and disclosure of foreign land ownership. And many states are begiiming to restrict or even prohibit foreign purchasing of their farm land.

Considerable foreign money is also flowing into urban real estate. Bu t here con­siderable secrecy sti l l prevails. I n Washington D.C. , for instance, "there are a lot of office buildings that have been bought with Mid-East money. But as a rule you don't get the facts behind it because they are kept pretty quiet," according to J i m Roberts in the Washington office of the Rome-based Societa Generale Immobiliare U . S . A Washington consultant notes, "foreigners look upon Washington as the centre of the universe." Other primary choices for foreigners are Houston and Southern California where numerous Iranians are now relocating.

Since the U S Commerce Department keeps track of foreign ownership of non-agricultural property mostly by clipping newspapers and magazines, the extent of this type of foreign investment remains largely unknown. "What we know about may only be the tip of the iceberg,"

O P E C Surplus Invested i n U S 1974-1977 B y Categories Treasury Securities 34% Other Marketable U S Bonds 12% U S Stocks 12% Commercial Bank Liabilities 16% Other (including real estate, other direct investment, pre-payment on U S exports, debt amortisation) 26%

Source: "Arab Investments and Influence in the United States," Louis J Walinsky for American Jewish Committee, October 17, 1978.

Notes: - Minimum total amount of O P E C sur­

plus invested in U S during this period, according to Treasury Department figures, is $44 billion as of 1976, one-fourth of total O P E C investible surplus. Total estimate of figure today is between $60 and 70 billion.

- Over 90 per cent of this total for O P E C in­vestment is from Middle East countries with a great majority of this from Saudi Arabia alone.

- Estimated 50 percent of investible surplus of Saudi Arabia, Kuwait and U A E in­vested in U S .

- I n addition, more than $10 billion deposited by O P E C countries in foreign branches of U S banks.

30 THE MIDDLE EAST FEBRUARY 1979

COVER STORY

Commerce Department official Milton Berger admits. Even so, according to the Real Estate Washington article, "to suggest that foreign investment is a major force in the hyper-active Washington real estate market would be inaccurate."

Another specific problem, this one the focus of considerable Jewish attention, comes from the increasing practice of "investing in education" in the form of en­dowments to American institutions.

The most visible and controversial grant so far has gone to Georgetown University to establish the Centre for Contemporary Arab Studies.

According to the Jewish monthly Moment, at least 75 American colleges and universities have accepted gifts from various Arab states for purposes of supporting Middle East or Arab studies, fra Silverman, the American Jewish Committee's "Arab watcher," charges in the first issue of Petro Impact that "while these funds may be used for perfectly legitimate purposes - including study of the contemporary Arab world, they

may also be used to skew university curricula, underwrite biased anti-Israel pro­grammes and support on-campus pro­paganda activities not consonant with the universities' fundamental quest for truth and knowledge."

A number of specific incidents have caused considerable academic uneasiness and press attention:

. . . Saudi Arabia's gift of $1 million to endow a King Faisal Chair of Islamic and Arab Studies at the University of Southern California has raised special questions because the university has apparently agreed to consult Saudi officials before assigning the chair.

. . . A n educational exchange programme between A l Fateh University in Libya and the University of Alabama was ended after Jewish-inspired protests about the nature of the Tripoli regime.

. . . Three Quaker-affiliated schools -Bryn Mawr, Swarthmore and Haverford -discovered that a $590,000 grant for Arab studies was to come from the Tr iad Foun­

dation. The foundation was then recognised as an offshoot of Adnan Kashoggi's Triad corporation. A l l the schools except Bryn Mawr have backed out, with Haverford stating that "because of its Quaker background . . . it shouldn't apply for funds derived from arms traffic which it deplores."

. . . The University of Pennsylvania has rejected a grant from the Libyan-financed Arab Development Institute over the issues of discrimination and ideological advocacy.

A final area of special concern for many Americans is international banking. I n the past five years the number of foreign banks in the U S has more than doubled. And their assets have tripled to over $80 billion.

But here too, U S banking abroad still far outpaces what foreigners are doing on American shores. Foreign branches of U S banks have $258 billion in assets - more than three times what foreign banks have for assets in the U S . And for many of America's most prestigious banks, from one-third to two-thirds of their total deposits are held by their foreign branches.

Sti l l , the rather petty (in amount) Bert Lance - Gaith Pharaon Geoi^a Bank affair has exposed all banking ventures to public glare and left a bad political taste.

A number of Senate Foreign Relations Committee reports often emphasise a number of international monetary system concerns about the bundles of foreign money made available to the U S banking system.

According to the A J Committee's Walinsky report, "two kinds of risks are in­volved in Arab investments in this country. First if the Arabs decided to use their money as a weapon, they could abruptly liquidate their assets in this country and transfer them abroad, completely disrupting our financial markets. 'The second risk is that U S banks, which have played a major role in lending to oil-importing countries to help them finance their balance of payments deficits, may sooner or later encounter debt default or repudiation by their debtors which could plunge the banks themselves into bankruptcy and cause a collapse of the entire international financial structure."

And in general, the report warns, "Saudi Arabia has acquired a degree of infiuence and power over the U S never before achieved by any other country in this nation's history."

How Americans will respond in coming years to the continual inflow of foreign in­vestment capital will depend on a great variety of political and economic im­ponderables.

But the nervousness and anxiety here seem certain to be at least leading to greater disclosure requirements and possible restrictions on certain forms of investment opportunities. And the fact that American public opinion and the press are both supersensitive to the Arab component of foreign investment presents special public relations problems for Arab investors. •

32 THE MDDDLE EAST FEBRUARY 1979